Redwood Trust has approved a 14% hike in its quarterly dividend to $0.16 per share from $0.14. Notably, the specialty finance company has been regularly paying dividends, with this marking the 87th consecutive quarterly dividend payment. Redwood stock was up about 2.1% in Wednesday’s extended trading session.
Redwood (RWT) said that the new quarterly dividend will be paid on Mar. 31, 2021, to shareholders of record as of Mar. 24, 2021.
Its annual dividend of $0.64 per share now reflects a dividend yield of 6.3%.
The company’s CEO Christopher J. Abate said, “We remain committed to delivering a stable to growing dividend while continuing to strategically deploy capital going forward.”
Last month, Redwood reported mixed 4Q results. Its earnings of $0.42 per share declined 7% year-over-year but exceeded the Street’s expectations of $0.34 per share. Revenues fell about 47% year-over-year to $24 million and missed the consensus estimates of $29.5 million.
On Feb. 11, Raymond James analyst Stephen Laws raised the stock’s price target to $13.50 (33.5% upside potential) on expectations of “dividend increases and BV [book value] growth, and the attractive valuation relative to our target.” Laws maintained a Buy rating on RWT and added, “We expect continued BV growth from retained earnings, recovery of unrealized marks, and valuation gains from securitization calls.”
Overall, RWT has a Strong Buy consensus rating based on 4 Buys and 1 Hold. The average analyst price target of $11.05 implies upside potential of 9.3% to current levels. Shares were down about 33.8% in the last year.